Nonprofits say they may soon reach crisis point due to state budget impasse
October 5, 2015 8:08 PM
Chris Knight/Associated Press
The state fiscal year began July 1 without a budget after Gov. Tom Wolf vetoed a Republican-crafted $30.2 billion budget passed by the state House and Senate.
By Joyce Gannon / Pittsburgh Post-Gazette
Every Child Inc., a nonprofit social services agency based in East Liberty, places at-risk children in foster homes and pays the families for expenses they incur to care for the children.
Typically, those payments are covered by contract payments that Every Child receives from Allegheny County for arranging the foster placements for families in crisis. The county, in turn, is reimbursed for those costs by the state of Pennsylvania.
But with the state budget impasse now in its fourth month, Every Child isn’t getting paid and is fronting the family’s costs out of its own budget.
To keep its own balance sheet in order, the nonprofit has tapped its line of credit, curtailed hiring and put office technology upgrades on hold. Recently it took out a $100,000 emergency loan.
“We’re doing everything we can to make sure we can take care of children at risk,” said Laura Maines, executive director of the nonprofit that has a staff of 62 and an annual budget of $3.8 million.
Every Child is one of many nonprofits bracing for an operating crisis if the state budget stalemate isn’t resolved soon.
According to a survey released Monday by the Greater Pittsburgh Nonprofit Partnership and the Forbes Funds, nearly 60 percent of human service and community development agencies said they were experiencing cash flow issues already and another 26 percent expect they will by November.
Some said they would temporarily stop providing services or shut down if the budget is not passed by next month.
Kate Dewey, president of the Forbes Funds, an affiliate of the Pittsburgh Foundation that provides management assistance to nonprofits in the region, said people served by nonprofits “are losing services that help meet their basic needs and security.”
The survey was distributed to about 200 nonprofits in Allegheny County and the results were based on 43 responses.
Asked what steps their agencies were taking to deal with funding gaps, 44 percent said they had cut administrative costs as of the first week of September.
Fourteen percent had reduced staff hours or postponed payroll, and 14 percent had already reduced services. Another 2 percent said they temporarily stopped services.
Asked when their agencies would have to stop providing services, 60 percent said sometime between now and December.
The state fiscal year began July 1 without a budget after Gov. Tom Wolf vetoed a Republican-crafted $30.2 billion budget passed by the state House and Senate. Last week, he vetoed an $11 billion stopgap plan that would have covered four months of state spending.
Today, the Democratic governor plans to deliver a revised plan to raise state taxes to fund education and other programs, but Republican lawmakers who hold a majority of seats in the Legislature oppose broad-based tax hikes.
Bridgeway Capital, a Downtown-based nonprofit community loan fund, provided Every Child with its emergency loan and is making a total $2.1 million available to nonprofits that are facing cash flow problems because of the state budget.
It has already closed on $600,000 to five agencies and plans to loan the balance to eight other nonprofits that provide human services, said Mark Peterson, Bridgeway’s president and chief executive.
Among the organizations that received short-term loans to date are Easter Seals Western and Central Pennsylvania; and Bridge to Independence, a Braddock agency that assists women and families struggling with homelessness.
Another 20 nonprofits have sought help and Bridgeway is hoping foundations may provide funding for another round of loans, Mr. Peterson said.
At First Step Recovery Homes in McKeesport, a transitional residence for men recovering from drug and alcohol abuse, Keith Giles has been forced to lay off nine employees because revenues from state contracts are not available. Those contracts are about 37 percent of First Step’s annual budget, he said.
While Mr. Giles and one other staff member juggle intake forms, assessments, phone calls, fundraising and night monitoring of 23 residents, some laid-off employees show up several times a week to help.
“If I can keep the lights, the gas, the water and the phones on until the budget is approved, I will still be able to operate.”
Joyce Gannon: jgannon@post-gazette or 412-263-1580.
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